Performance fees - the good the bad and the downright rotten

Many moons ago, I mentioned in this column my leisurely lunch one fine summer's day with Mr Ed Moisson from Lipper, during which we discussed the costs involved with fund management.

The focus of our discussion was on the rising cost of fund management, the wonderful new fee structures being introduced and the even more worrying trends on the mainland in Europe. Ed clearly knows his TERs from his common-or-garden onions and so I asked him to dig around in his database and examine how expenses are related back to performance. Moisson has reported back and I have to say even a hardened cynic like me was astonished by his analysis . First the obvious targets – fund of funds. It is probably no surprise to any of you that fund of fund unit trusts charge a bomb – they a...